State Tax Rulings
Free state tax letter rulings and advisory opinions with plain-English summaries, full citations, and the original source on every page.
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Would the proposed standardized certificate qualify as a Texas resale certificate, an exemption certificate, or both?
It qualified as a resale certificate, but not as an exemption certificate because it lacked a space for the exemption reason. Adding a certificate-type checkbox and an exemption-reason field would mak…
Could a restaurant buy toys tax-free for resale when every taxable children's meal included a toy that could not be bought separately?
Yes. The toy was part of the taxable meal sale, even though the meal price increased by only $0.06 while the toy cost about $0.41. The restaurant correctly collected tax on the meal package and could …
Were colostomy pouches, Foley catheters, and leg urinal drainage bags exempt from Texas sales and use tax?
Yes. The Comptroller treated colostomy pouches and leg drainage bags as ileostomy, colostomy, or ileal-bladder appliances and Foley catheters as prosthetics. The purchaser should not have been charged…
Were medical-waste incineration and collection charges taxable, and did the collector need to issue an exemption certificate to the incinerator?
The incinerator's destruction charge to the collector was not taxable, so no exemption certificate was needed. The collector's garbage-collection charge to customers was taxable, including any passed-…
Did a purchaser's written refund request to its supplier stop Texas's four-year sales-tax refund limitations period?
No. The period ran four years from when the tax was due and payable to the state. Only a refund request filed with the Comptroller by the person who paid the tax directly to the Comptroller could toll…
Could a contractor buy natural gas tax-free while using it to test and balance HVAC units and keep pipes from freezing during construction of a public high school?
Yes. The gas was used in performing the construction contract, so the contractor could claim exemption if the high school was public. The utility exemption certificate had to identify the exempt schoo…
How did Texas tax an oilfield company's hauling of water, brine, plugging mud, and KCL, its frac-tank rentals, testing, and waste disposal?
Third-party hauling was generally nontaxable unless it was taxable waste removal or well servicing. Seller-billed transport followed the product: fresh or natural brine water was exempt, while process…
Is a bimonthly industry newsletter an exempt periodical, and does having all its articles written by one person change the answer?
It depends on authorship. Edward A. Donoghue Associates, Inc. proposed a bimonthly newsletter, Elevator Code News, reporting on codes and standards for the vertical-transportation (elevator) industry,…
Is a cooperative direct-mail advertising program a nontaxable advertising service or a taxable sale of property, and who owes use tax on the mailed materials?
The fees are a nontaxable advertising service, but the agency owes use tax on the materials it distributes in New York. A law firm asked, for its client ('Company'), about a cooperative direct-mail pr…
Is a not-for-profit stamping organization created by statute a New York State agency or public corporation exempt from sales and use tax?
No — it is not exempt. The Excess Line Association of New York, a not-for-profit organization created by an act of the Legislature (Insurance Law § 2130(a)) to review and 'stamp' excess-line insurance…
Is a home-inspection report bought by a prospective buyer a taxable information service, or a service to real property?
It is not taxable. Joseph A. Matocha asked whether charges for 'home inspection services' are subject to sales and use tax. In the transaction, a prospective buyer hires an inspector to examine a resi…
Do a window-and-door distributor's fabrication operations qualify its machinery for the manufacturing (production) exemption?
Yes — its production machinery qualifies for the exemption. RyTown Millwork, Inc., a distributor of windows and doors that sells to builders and contractors but does no installation, asked whether its…
What requirements applied to Texas's historical residential child-care facility vehicle-tax exemption?
The vehicle had to be purchased, used, or rented by a qualifying 24-hour residential child-care facility and used primarily to transport resident children. The facility said it met the licensing and m…
Did excluding income from federal gross income under 26 U.S.C. § 883(a)(1) make a corporation exempt from Connecticut corporation business tax?
No. The excluded income was also outside Connecticut gross income under the historical definition, but that did not make the corporation federally tax-exempt for Connecticut's exemption rule. X Corpor…
Which Texas sales taxes were refundable on natural gas and electricity billed to a nursing home after nursing homes became residential users?
For billing periods beginning on or after January 1, 1988, nursing-home gas and electricity were exempt from state, county, and MTA/CTD tax. City tax depended on the city's election; because this city…
Were charges for creating and maintaining a customer database, processing and updating mailing lists, and producing response reports taxable?
Yes under the historical rule. DRS treated the full receipts for creating and maintaining the computerized customer database, processing and updating mailing lists, and generating response-analysis re…
Does a corporation that was dissolved decades ago and holds no assets owe New York franchise tax just for signing a deed to fix a title defect from its original 1967 liquidation?
No. Signing a corrective deed solely to fill a gap in the chain of title, with no other activity and no assets, is not "conducting business" — the dissolved corporation owes no franchise tax for any y…
Could an off-road motorcycle or ATV trade-in reduce the taxable amount on a street motorcycle?
No. Only a motor vehicle traded for another motor vehicle reduced the motor vehicle tax base, and the letter said ATVs and off-road bikes were not motor vehicles. For limited sales tax, it separately …
Are advertising market-research services — focus groups, tracking, attitude, copy, and concept studies — a taxable information service?
It is not taxable — the research is a personal, individual information service. Paul R. Comeau, of Hodgson Russ, asked about market-research services performed by or for advertising agencies — focus g…
What Texas vehicle tax applied when a service member bought a car in West Germany and later sought Texas title?
The historical 6% motor vehicle tax was due on the original purchase price when the service member applied for Texas title. The letter based that result on Texas being the member's home of record desp…
How did Texas tax carpet installation in nonresidential remodeling, residences, new construction, additions, and previously unoccupied space?
Nonresidential carpet installation was taxable remodeling on the total charge. Residential work, new construction, additions, and initial finish-out were contractor jobs with taxable materials and non…
Were fees taxable when a customer paid for restricted use of software in Texas, even if the agreement called the payment a royalty?
Yes. The payment was taxable as a software sale, lease, or license fee; calling it a royalty did not change the result. The letter distinguished royalties paid to creators per copy sold, which could b…
Was a membership fee taxable when it entitled cardholders to buy merchandise from participating retailers at a discount during specified periods?
No. The Comptroller ruled that the discount-program membership fees described were not subject to sales tax.
May a lessor buy a CAT-scan machine for resale, and are its lease charges exempt under the production exemption?
The machine can be bought for resale, but the lease charges are not production-exempt. Segal Equipment Associates owns a CAT-scan machine it leases monthly to a corporation that uses it to produce dia…
Are payments under an equipment 'lease' taxable rentals, or nontaxable payments under a security agreement (financing)?
They are nontaxable — the 'lease' is really a security agreement. Eastman Kodak Company asked whether payments a company (Corporation A) makes to a finance company (Corporation C) under a lease-financ…
Was a stripped-down truck chassis exempt as a manufacturing component when converted into an aircraft ground-power vehicle?
Yes under the historical manufacturing exemption. X Company substantially altered the chassis and added a ground-power unit, producing a machine with a different name, nature, and use that supplied el…
Did Connecticut's historical sales-tax exemption for voluntary asbestos removal include an environmental consultant's related services?
Yes under this historical ruling. Because DRS had treated asbestos removal as exempt voluntary containment or removal of hazardous waste, the Commissioner interpreted that exemption to include an envi…
Were a wedding coordinator's full-service, partial-service, referral, or commission fees subject to Connecticut sales and use tax?
No under this historical ruling. DRS said wedding-coordinator service fees were not taxable, but tangible personal property sold by the coordinator was taxable. Tax on caterers, photographers, videogr…
Were consulting fees taxable when a firm reviewed repair bids, recommended contractors, and advised savings and loan institutions about real-estate repairs and maintenance?
No. The separately contracted consulting service was not taxable. The consultant had to pay tax to its suppliers on taxable items it used while providing the service.
Could a nonprofit fundraising raffle buy a boat and trailer tax-free for use as prizes?
No. Sales tax was due when the boat was purchased, and motor-vehicle tax was due to the county on the trailer. The nonprofit could not use a resale certificate because it was raffling rather than rese…
How did Texas tax removable lockers leased to nightclubs and then rented by the clubs to patrons?
The nightclubs had to collect tax on patron rentals because the lockers remained tangible personal property. The locker company could receive its share tax-free with a resale certificate, but it still…
After October 1, 1989, was city sales tax due on garbage collection when the service provider was inside the city but the dumpsters were outside city limits?
No. Beginning with the first billing cycle on or after October 1, 1989, local tax was sourced to where the waste was collected, so city tax did not apply to outside-city dumpsters. County use tax coul…
Was a retailer's supplier reimbursement taxable when suppliers covered 50% to 75% of food, drink, and supply costs for a free customer barbecue?
No. The reimbursement was not subject to sales tax because the free barbecue was a jointly sponsored promotional event. The retailer paid tax on taxable event purchases, and the supplier payments did …
When did South Carolina tax a resort travel-points program—when customers bought points or when they redeemed them?
Tax applied at redemption, not when the customer bought the points. A redemption for tangible personal property or accommodations was the taxable transfer, and the points were valued at the customer's…
Was the XYZ Foundation exempt from South Carolina admissions tax on its fundraising events as an exclusively charitable nonprofit?
Yes. The Foundation's bylaws, fundraising and grant activity, dissolution clause, and federal 501(c)(3) determination showed it was organized and operated exclusively for charitable purposes, so its a…
Did converting a vacant manufacturing building into residential condominiums count as nontaxable new construction because the renovation cost exceeded the building's price?
No under this historical ruling. DRS treated work performed solely inside the existing building as a taxable renovation. The building's vacancy and the high renovation cost relative to its purchase pr…
Were hazardous-waste container rentals exempt, and were labor backcharges to a detailer taxable when bad drawings caused parts to be remade?
The container rental was taxable because only actual hazardous-waste disposal was exempt, not containers or equipment. The backcharge for extra corrective labor caused by the detailer's drawing errors…
How did Texas tax wallcovering and floorcovering installation in new, residential, unfinished, addition, and existing nonresidential projects?
Labor was not taxable for new construction, unfinished space before first occupancy, residential property, and new additions. Existing nonresidential installation or replacement was taxable on the tot…
How did Texas calculate tax on materials and contractor profit under a cost-plus contract with a guaranteed maximum price?
The contract was separated when materials and labor were separately stated. Materials were taxed on the higher of the contractor's actual cost or the owner's stated cost. A fee expressly assigned as a…
Was window-replacement labor taxable when work was limited to student dorm rooms inside a building used for both residential and commercial purposes?
No, if the residential labor was separately identified and documented. Materials remained taxable. Without records showing that the work was confined to dorm rooms, the mixed-use project could be trea…
Were cooperative direct-mail advertising services taxable when brochures, coupons, and flyers were mailed to Connecticut households?
Yes under this historical ruling. DRS treated preparing and distributing cooperative direct mail as taxable advertising, not exempt media advertising. The benefit was received at the advertising messa…
Were Active 8 Beverage Crystals, Acerola Cherry Drink Mix, and Active 8 Fruit Squeeze exempt Texas food products?
No. The products were taxable packaged soft drinks or diluted juices rather than exempt food products. The collection agent had to collect tax from distributors based on the suggested retail selling p…
Did the net gains from selling two business divisions count as gross receipts, and were those receipts allocated to Texas?
Yes. The net gain from each division's tangible-asset sale was a gross receipt computed under GAAP pursuant to § 171.112, and the receipts were allocated to Texas because the assets were delivered to …
Were the listed glucose-testing supplies, insulin syringes, and insulin exempt from Texas sales tax?
Yes, under the stated conditions. The listed testing supplies were exempt therapeutic devices when sold to an individual under a doctor's prescription; medical-use insulin syringes were exempt, and in…
Who had to collect Texas sales tax on antique-mall consignment sales, and did the consignor need a permit for the mall location?
It depended on whether the consignor was identified to the buyer. If identified, the consignor was the seller and needed a permit at the mall; otherwise, the mall proprietor was the seller and had to …
We're a tax-exempt nonprofit buying a condo to house mentally retarded adults. Our purchase contract makes us pay all transfer taxes even though sellers normally pay them, and we'll need a mortgage to close. Does our nonprofit status exempt us from the real estate transfer tax on the purchase, and does it exempt us from mortgage recording tax on our loan?
No exemption from transfer tax, and only a PARTIAL mortgage recording tax exemption -- a nonprofit's tax-exempt status is much narrower protection than many assume. The Guild for Exceptional Children,…
Was city gross-receipts tax or a local franchise fee due from companies outside city limits when a nonutility producer sold electricity to a utility for resale?
No. The companies were outside the city, two were not utilities, and the electricity producer sold to an electric utility for resale under § 182.023. If the area were later annexed, the utility servin…
Does an unincorporated condominium association organized under New York's condominium law owe Article 9-A corporation franchise tax if it earns income beyond just common charges, like a laundry room concession?
Yes. A condominium association that earns income from a laundry room concession and storage charges — not just common-charge assessments — is providing a medium for conducting business and sharing gai…
How are vehicles from a second stage manufacturer or second stage converter titled and registered in Kansas?
Through the manufacturer's certificate of origin, with specific title-application details. This Division of Vehicles memo defines a 'second stage manufacturer' (one who affixes a body, cab, or special…
Were services by property-management employees taxable when they worked exclusively at one bank and the manager was reimbursed dollar for dollar for salary and benefits?
No. Employees permanently assigned to one property were treated as employees of that property when the management company was reimbursed for their salaries; the stated cleaning, repair, and maintenanc…
Did completely gutting and rebuilding the interior of a previously occupied office building count as tax-exempt new construction?
No. Because the superstructure remained and the building had already received its initial finish-out, the work was taxable nonresidential remodeling. Labor for genuinely added square footage would be …
Could a commercial nursery buy boards and nails tax-free to build plant tables needed for air circulation and disease prevention?
Yes under the 1990 ruling. The tables were equipment used exclusively to produce plants for sale, so their boards and nails could be bought with an exemption certificate. STAR warns that a 2011 law la…
Would South Carolina follow federal income-tax treatment for a savings-bank conversion and corporate reorganization involving X, Y, and Z?
Generally yes. South Carolina followed federal law as of December 31, 1988 for the listed reorganization provisions, but applied IRC § 593 as of December 31, 1986—including the Tax Reform Act of 1986—…
Were topographic and boundary surveys taxable on land or underwater, and was real-time vessel-position information taxable?
Topographic surveying was not taxable, whether on land or underwater. Boundary, right-of-way recovery, and lot surveying were taxable. The letter did not decide real-time vessel-position service becau…
Was a separately stated federal retail sales tax collected directly from the customer included in the Texas sales-tax base?
No for the post-April 1, 1983 federal retail tax described. When separately stated and collected directly from the customer, it was excluded from the Texas tax base; Texas tax paid on it in error coul…
Is a prewritten tax-preparation program taxable when the vendor personalizes it with the buyer's information to prevent copying?
Yes — the prewritten tax program (and its renewals and updates) is taxable. Lorraine L. Dunn, CPA, buys a tax-processing software program that the vendor personalizes with her name, address, Social Se…
Were architectural services for the State of Connecticut exempt when a Connecticut contractor subcontracted some or all work to a related foreign corporation?
Yes under this historical ruling. Architectural services rendered to the State were exempt whether performed directly or through the subcontract. The Connecticut corporation could issue the foreign af…
Does Utah sales/use tax apply when a company withdraws leased equipment from its resale/lease inventory and transfers it to a related company in a reorganization?
Yes. Tax is due when equipment that was purchased tax-free for a resale/leasing inventory is withdrawn from that inventory for a purpose other than sale — including a transfer to a related company in …
Was projecting live camera images of a performance onto a screen taxable when the event was not recorded?
No. Live projection without recording was a nontaxable service, so the provider paid tax on its equipment and materials. If the provider recorded the event on film or tape, the entire customer charge …
How did Texas require vending-machine operators to report food, candy, soft drinks, and cigarettes under the historical rules described in 1990?
From October 1, 1987, food was reported at 50% of retail price with no spoilage allowance. Candy, soft drinks, and cigarettes were reported at full retail price; cigarettes had been taxable since Octo…
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